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Holiday Spending Tips

Holiday Spending Tips

By Suzanne Gellman, Consumer Economic Specialist, University of Missouri Extension

 

It is getting to be that time of year again; the winter holiday catalogues and holiday decorations are making an appearance.  So…..I am going to start the discussion on holiday spending.

The holidays are really about spending time with family and friends, right?  Important aspects are holiday cheer, goodwill and giving to others.  Here is my question – does giving to others really have to mean spending yourself into debt?  Or is there a better approach?

Is it time to re-think holiday spending that may be keeping you from reaching your financial goals?  If it took way too long to pay off last year’s holiday spending, or you had financial goals that were delayed or unmet because of the cost of last year’s holiday, here are some things to consider this holiday season:

  • People will remember the time you spent with them and the fun things you did together more than they will remember what you gave them or how much you spent!  Fun times can be free and low cost community activities, games, arts and crafts, baking, teaching someone a skill, etc.
  • Make a big financial decision before heading out to do any holiday shopping – how much can you afford for the overall holiday – gifts, decorations, holiday food, eating out, etc.?  When you set your spending limit, try to choose a figure that will not create any debt that needs to be paid off after January. You up for the challenge? You can use the holiday spending planner at:  http://extension.missouri.edu/wfes/savingandspending.aspx to help you implement your plan.  This planner also has great ideas for inexpensive gift giving.  Another alternative for keeping track are holiday spending phone apps such as Santa’s Bag. (See https://redgiftroad.com/ for more info on the Santa’s Bag app).
  • Limiting your spending on the holidays can lead to some tough but important conversations.  Your family may have been doing things the same way for years and you may be asking for a change in order to keep your finances on track. What I often find, though, is that many people want to cut back on gift giving outside of their immediate family (spouse and kids) – but someone just needs to make the first move. Even in your immediate family, consider changing the emphasis from buying lots of meaningless gifts that end up in the back of the closet or are rarely used, to buying just a few (or one) higher quality purchases.  Place more emphasis on spending time together.
  • Ideas people have implemented to reduce the emphasis on gift giving to  family and friends:  a.) Pick a name gift exchange with a dollar limit ($10-$15) – this way each person gets one gift to open; b.) Giving gifts only to young children – no teens or adults; c.) Have a cookie exchange instead of gift giving; d.) Eliminate competition, and purchasing things people may not want or use anyway, by not exchanging gifts with anyone that is not your spouse, child or grandchild; or e.) Share your ideas….. I would love to hear what you have done to reduce gift giving expenses.
  • What many family members and friends really need is something you can do for them.  Consider giving coupons for your skills, talents, hobbies, or even just your time.  Can you take a great family photo for a sibling or friend?  Can you help your parent with things they need done around the house – gardening, home maintenance (lightbulbs, clocks, garage cleanup, etc.)?  Can you teach someone to bake, scrapbook, or help them organize their stuff?  There are many great ideas available on the Internet.

Reposted from: https://financialinfoforwomen.wordpress.com/2016/10/21/staying-out-of-debt-for-the-holidays-part-1/

 

Holiday Spending Tips – Part 2

Planned holiday spending is a great way to prevent financial stress in the new year!

Set limits on overall holiday spending:  Decide how much you are really comfortable spending on gifts.  A quick rule of thumb might be to keep your spending under 1.5 percent of your yearly gross income.  For example, if your income is $30,000, try to keep your spending under $450.  Set limits on how much you spend on food, decorations, travel, entertainment, holiday cards, etc.  See the Holiday Spending Planner at http://extension.missouri.edu/wfes/documents/holidayspendingtips.pdf

How do I set these limits you ask?  Make a list and stick to it!  Your list should include all the people you need a gift(s) for, and their priority level.  Then, by priority, assign each person a dollar amount.  Hint – don’t exceed your limit just because you have more people than dollars. This is when you have to be creative and either 1. Eliminate people from your list, 2. Make them something instead of buying, 3. Give coupons for your time or talents 4.  See part one. 5. Look at the holiday spending planner or Internet sites for gifts that stretch your dollars.

Once you have your list of people and amounts to spend, make a list of the possible gift(s) for each person and estimate the cost.  Because actual purchase prices may vary, allow a 10-15% margin.  Look online, in newspaper ads, catalogues, etc. to get an idea of the cost, and plan out your spending and shopping before you leave the house.  To get the best prices, make use of  bar code scanning phone apps or online price tracking tools such as CamelCamelCamel (http://camelcamelcamel.com/  tracks prices on Amazon).

Tips to stick to your limits:

  • Use cash and bring only the amount of money you need or can afford to spend when shopping.
  • Consider using the envelope method of planning.  Create an envelope for each person with their name and the amount of money you have allocated to spend on them. Also do this for the limits you have set on food, decoration, etc.   Don’t borrow from other envelopes unless the purchases have already been made for that person or category.
  • Use cash, use cash, use cash. Bring only the amount you can afford to spend (this may give you leverage to negotiate more on purchases).
  • Keep track of what you are spending.  Each time you make a purchase, write down the price you paid.  If you are using a credit card, make sure you are keeping a record of your spending for each person or category and subtract it from the amount you agreed to spend. It is easier to stay on track if your holiday spending planner comes shopping with you.  There phone apps available to help you keep track of holiday spending.  Most seem to have an upfront cost, but Santa’s Bag for IOS is free (although has in app purchase available).
  • Set aside money each month for these end of year holiday expenses if you are not doing it yet. Set a limit in January for what you plan to spend at the end of the year and set aside 1/12 each month.   If you have difficulty doing it yourself, consider using a special account at a bank or credit union that will help you save monthly and release the money towards the end of the year.

Reposted from: https://financialinfoforwomen.wordpress.com/2016/10/28/holiday-spending-part-2-staying-out-of-the-red/

 

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